SEC Delays Grayscale Ethereum Futures Trust ETF Decision Again

Mar. 23, 2024
SEC Delays Grayscale Ethereum Futures Trust ETF Decision Again

In a recent development, the Securities and Exchange Commission (SEC) has once again delayed its decision regarding the proposed Grayscale Ethereum Futures Trust exchange-traded fund (ETF), as detailed in a recent filing.

In the filing published on March 22, the SEC announced an extension of the deadline from March 31 to May 30 to determine whether to approve the Grayscale Ethereum Futures Trust ETF, designed to invest in Ethereum futures contracts.

The Securities Exchange Act of 1934 gives the agency 180 days or six months from the publication of notice of the proposed rule change. The agency deferred its decision in November after Grayscale applied in September.

“The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change a “d the issues raised therein,” the SEC said, echoing previous announcements.

The SEC pushed back the approval date for Grayscale’s futures ETF product till December 2023, explaining that it will seek more public opinions on whether to list the ETF. Three months later, Grayscale sought NYSE Arca Rule 8.200-E approval for its Grayscale Ethereum Futures Trust ETF listing.

Grayscale’s ETF Influence Strategy

Following the listing, Bloomberg ETF analyst James Seyffart claimed that Grayscale used its futures ETF application as a “trojan horse” to influence the SEC’s decision. He suggested it was aimed at securing approval for its spot Ether ETF. He explained that if the SEC approved Grayscale’s application, it would allow Grayscale to argue for the approval of its spot Ether ETF application.

However, on January 25, 2022, the commission postponed its verdict on whether to approve a spot Ether ETF from Grayscale while opening it up for public comments. Following the approval of spot Bitcoin ETFs on January 10, crypto industry commentators have become increasingly skeptical.

They question whether the SEC could become stricter on crypto-based ETFs. John Lo, Capital founder, anticipates heightened SEC scrutiny on upcoming crypto ETFs, particularly those focused on Ether, as recently reported.

“Scrutiny towards cryptocurrency ETFs has only grown, as you could argue to a certain degree that the SEC was forced to approve the Bitcoin ETFs because of its case with Grayscale. Undoubtedly, the SEC views that as a huge loss for themselves.”

Other asset management firms are also facing obstacles with their Ethereum ETFs. The SEC delayed its decision on BlackRock’s iShares Ethereum Trust and Fidelity’s Ethereum Fund applications in separate March 4 filings. The delay affects the approval process for both entities seeking to launch investment products tied to Ethereum.

Related Reading | Grayscale’s Bitcoin ETF Outflows Jump to $1.8B This Week

Rida Fatima

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An ardent wordsmith with a rich five-year background in delving into the realms of finance and cryptocurrencies. Alongside curating captivating blogs, Unique's talents extend to crafting imaginative and engaging content.